Tag Archive for: Pennsylvania Association of REALTORS

As a homebuyer, the landscape can be downright intimidating these days. Yes, multiple offer situations exist now, but this is changing and by July they might all but cease. First-time buyers can especially have concerns in this market, which is still a seller’s market, even though the pendulum is shifting. Why the concern? Well, interest rates have climbed and aren’t going down anytime soon. Furthermore, there’s still competition from other buyers who are eager to purchase, have been looking for a while and haven’t been priced-out of the market yet. There are many forces to consider when given the opportunity to buy real estate. Buyers in our region (Northeastern Pennsylvania) are paying about $300 more per month for a home via lender financing than they would have only six months ago for the same house. This is because rates have crept up about 2.5% points since January.

Lately, the Pennsylvania Association of REALTORS® (PAR) made some clarifications to one of their standard forms, the Appraisal Contingency Addendum (ACA), in an effort to clear up a little of the confusion surrounding buyer and seller rights and obligations surrounding the purchase of a property, specifically if a home fails to appraise. These changes will take effect on July 1, 2022. There’s been a misunderstanding in recent years about what the appraisal contingency means exactly for both parties and why the buyer doesn’t have the right to terminate an agreement of sale, if the appraisal contingency falls away, but that’s another conversation altogether.

As we mentioned above, there are still homes selling for over list price and there will be pockets of this type of activity I’m sure during the next few weeks. The concern for many potential buyers today is where does it put me if the appraised value of the home I’m looking to purchase comes in lower than the actual purchase price? This is a legitimate consideration. Thankfully, in Pennsylvania, the purchaser, through guidance from their REALTOR®, can rely on what’s called the “minimum appraised value” to protect them in the transaction. This would be the lowest value an appraiser could produce that would require the buyer to continue with the purchase. The ACA is there to accompany the sales contract and help these parties make every effort to continue forward in good faith toward settlement.

Of course, it doesn’t always work out for one or both parties, but protections like the appraisal contingency can help buyers sleep at night. “Homes failing to appraise happens more than you might think, even now,” asserts Maria Muchal Berta, Associate Broker for Realty Network Group and Owner/Certified Residential Appraiser of Chiave Appraisal Group. “It really depends if the buyer has the money to close the gap between the purchase price and its appraised value. How badly do they want the home? In some cases where the appraised value falls short of the purchase price, where there’s a will, there’s a way.”

Angelo Ambrosecchia, Loan Officer for Guild Mortgage breaks down many of the intricacies involved in the following scenarios where homebuyers are seeking to secure funding for a home purchase.

“Prior to us getting involved, many transactions are negotiated that up to a certain price point, the buyer will pay the difference out of pocket, if a home appraises low. For example, someone is buying a home for $290K. If it appraises for $280K, they agree to pay the difference out of pocket, again, up to a certain amount. With inventory levels so low, we’re seeing this more as buyers don’t want to lose out on a home, if they can avoid doing so. In this example, if they were putting 5% down and getting a conventional loan, they would now be putting 5% of $280K down, and on top of that, paying $10K to make up the difference for the low appraisal, in addition to closing costs.”

“If the borrower has enough money down and they’re agreeable, we can adjust the loan-to-value to keep their out of pocket money the same. Here’s what I mean by that. We have someone buying a home for $290K and putting 20% down. This would make the loan amount $232K and down payment $58K. Let’s assume the home appraises for $280K and they want to keep their total out of pocket money the same, but agree to pay a total of $290K. We can lower the down payment from $58K to $48K and they can use that $10K to make up the difference. This keeps their total out of pocket funds overall, the same. In this case, they would now be putting $48K down on $280K and the loan-to-value would go from 80% to 82.9%. This would add a small PMI payment, but help the borrower accomplish their overall goal when it comes to total money, out of pocket.”

“As lenders, we can only lend up to the lesser of the appraised value or the purchase price. Always the lesser of the two.”

“If this isn’t agreed upon upfront, we first go to each REALTOR® and ask for any additional comparable properties the appraiser may have missed. At the permission of the buyer, we’ll have the buyer’s agent review the appraisal with them to see if any material items were missed. Is the bedroom count correct? Bathroom count? Square footage? Etc.”

“If no mistakes were made and the value isn’t able to be met, the REALTORS® involved would need to see if any re-negotiation can take place. If all parties can work it out or compromise on it, we move forward. If not, unfortunately, it may be a dead deal.”

There’s no “one-size-fits-all” solution for when the home in a real estate transaction fails to appraise, but we’ve attempted to give structure to variables that might come into play. We hope homebuyers have gained some valuable insight and can proceed with more confidence toward settlement.

 

For a related topic, see Why would I need an appraiser?

Finding Your Home During A Pandemic

It’s been a trying time for homebuyers and sellers since mid-March. They’ve had to put their plans on hold. Their real estate future has been met with uncertainty, but of course, sadly some have lost their jobs and are either in no position to purchase property or are afraid of losing their home. Thankfully, mortgage loan forbearance has rescued many in this post-COVID-19 society. In fact, loan forbearance won’t negatively affect your credit. (Learn more about it here.) There are others who have surprisingly found themselves in a better position than they did at the start of the year: People have realized how much they dislike their jobs by having time to reflect and/or working from their residences; some are “earning” more on unemployment compensation than they did when they were employed; and some, who have families, are working from home while saving money on daycare costs (though that’s coupled with homeschooling these days).

It is a crazy world we live in right now. It seems as if my third grader had written this tale – a contagious virus attacks our cities, school’s out (as well as our supply of toilet paper) and when we opened our pool in May, it began to snow.

Presently, real estate is opened for business in only twenty-four (yellow) counties in Pennsylvania, but it’s not “business as usual” yet. There are precautions taking place in those counties resuming in-person activities. Over the next few weeks, we could see real estate showings and in-person meetings resume in parts of Northeastern PA. Homebuyers, who are patiently waiting and believe they’ll be in a position to buy in the upcoming weeks, can take steps to be ready for action. We’ve outlined six ways you can find your next home while sheltering in place:

  • Use Google’s Street View option to explore areas of interest. This tool allows you to catch a view of a house or an entire neighborhood without even taking a step outside.
  • Time is a precious commodity. We value it and we know you do too! Therefore, when you discover areas of interest, estimate how long it will take you to commute to and from work.
  • Research area schools and learn how they stack up against other districts in your community. GreatSchools is one place to look, but there are others as well. Gain insight into our area school districts and properties available for sale within those districts.
  • Research local cities to find out all they have to offer. We’ve done a little research for you on some of the popular cities of NEPA, including Archbald, Carbondale, Clarks Summit, Dickson City, Dunmore, Factoryville, Moscow, Old Forge and Scranton.
  • Connecting with locals is a great way to gain insight into a neighborhood. Scour the web for resources from local communities as well as social media groups you can join.
  • Make sure to equip yourself with crime data for neighborhoods where you’re thinking about purchasing a home. This is one way to be informed about how safe or potentially dangerous an area might be.
  • Find a buyer’s agent you can trust, who has experience selling in various market conditions and who’s knowledgeable about the areas you’re interested in.

For more insight, check out 8 Ways To Test-Drive A Neighborhood While Sheltering In Place.

Coronavirus Q&A below. Over the course of the past three weeks, Northeastern Pennsylvania (NEPA) has undergone changes in lifestyle, business and just about everything else you can possibly imagine, including real estate. Governor Tom Wolf’s orders, as they pertain to our industry, remain non-life-sustaining. Yet, in a recent move by the Pennsylvania Association of REALTORS® (PAR), the association entered a brief in support of a lawsuit, which has been filed against Pennsylvania’s governor. The purpose of the suit? To designate real estate as a life-sustaining business.

PAR recognizes the importance of “[minimizing] in-person services wherever possible and [following] appropriate CDC guidelines” to keep the public safe and flatten the spread of COVID-19, but when deemed necessary, the association believes sellers and homebuyers should have the ability to attain shelter – one of life’s three essentials.

COVID Q&A: How to approach selling your home or buying one during the coronavirus pandemic.

Nevertheless, it’s a confusing time for buyers and sellers and you can add real estate professionals to the list also! Some consumers are left wondering if obtaining a roof over their head is even an option right now. The world is changing, which is fairly evident. Real estate and how the industry will operate henceforth will be altered too. We look to keep you informed as this fluid situation constantly changes. In the meantime, we’ve addressed some of the common questions we’ve received from our clients/customers.

Can I sell my home in this current climate?

If you’re thinking about selling your home immediately, understand that the present terrain in real estate has numerous roadblocks, which you’ll encounter in some way, shape or form. Can a home be sold momentarily? Yes, it’s possible, but realize tremendous assistance from the seller would probably be required in conjunction with the agent, while attempting to procure a buyer. This is a discussion you need to have with your REALTOR®.

Are there things I can be doing now to prepare to sell my home?

There are absolutely things which can be done now to prep your home to sell in the months to come. “Clearing out the clutter” should definitely be on the top of your list. Other strategies like painting, reorganizing, attacking problem areas of the home and landscaping should strongly be considered as well. Check out this page on our site, which will give you a few more ideas to consider. As a homeowner, you should contact your REALTOR® to come up with a plan for proceeding, as many sellers find themselves on the sidelines during this outbreak.

Should I look for a home now or wait?

There are multiple phases to the home search process. Prospective buyers typically start their search online months before they even physically enter a home (which is practically impossible since the outbreak of COVID-19). For the consumer who doesn’t have to move – wait. In the state of Pennsylvania, there are no in-person showings until further notice. Only services that a REALTOR® could offer remotely are permitted at this time. Of course, you can look at homes virtually through our extensive online catalog of properties available for sale in NEPA.

As a buyer if I decide to wait, what steps would you suggest I take so that I’m prepared for a time when in-person showings resume?

First and foremost, we would recommend setting up a “virtual” homebuyer consultation. If you have an agent, get in touch with them and discuss your needs. If you don’t have one yet, start your search there. Choosing a real estate professional is more important than one might think. Select the perfect agent for you! Secondly, reach out to mortgage lenders. Have a firm grasp on what you can and can’t afford, find ways to improve your credit score, if necessary, and look at the lending options available to you. Lastly, begin examining the market and what’s available in your price range. Create a list of pros and cons. Having a better understanding of these three dimensions can only propel you toward making better decisions when the time is right.

As homebuyers and sellers, can we engage in executing an agreement of sale during this unprecedented time?

Yes, but there’s so much that goes into making these types of decisions: Can I place an offer on a property I haven’t stepped foot in? Are there certain reasons I might want to press pause for the time being whether I’m buying or selling? We strongly suggest you discuss your concerns with your REALTOR® as well as your real estate attorney.

 

We hope this Coronavirus Q&A was helpful. Should you need further assistance, please reach out to our network of real estate professionals.

To say the Chinese Coronavirus (COVID-19) has affected our nation would be the understatement of the year, a year some wish would be over already. Unless you recently came out of a coma, you know the effects of this pandemic. Lately, Americans have grappled with a loss of certain freedoms caused from a seemingly invisible pathogen. It has impacted the way we work, how we travel (in some cases), how our households function and it certainly has affected our relationships in one way or another.

As a small business real estate firm, who supports the efforts of our clients and our REALTORS®, we understand firsthand how work, travel, household dynamics and relationships have been impacted since COVID-19 was declared a pandemic only ten days ago. Real estate, like so many industries, has been making changes in recent days through a paradigm shift in modes of communication and how they get business done. Since the World Health Organization has declared this disease a pandemic, we’ve taken more precautions, like so many businesses throughout our nation, including Pennsylvania, who have also done the same.

Honestly, real estate appears more trivial since we’ve been asked to hunker down. There are nurses, doctors, emergency personnel, volunteers and scientists, just to name a few on the frontlines. Their health is at risk as well as their loved ones. They certainly didn’t ask for this, but they’re compassion and sacrifice lead the way through this period of uncertainty. Having said that, real estate professionals are an essential link between homebuyers and sellers in their quest for finding a place they’ll call home. At Realty Network Group, connecting buyers and sellers, is our mission in four words. Yet we know through these challenging times, we need to safely operate within the confines of this contagion and administer the highest level of care and service we can reasonably provide to our clients and customers alike.

Guided by the Pennsylvania Association of REALTORS® (PAR), we’re proceeding with caution for the sake of our clients, their families in addition to our agents. For deals already under way, we’re also seeking the advice of counsel – time is of the essence. And that’s why PAR created the COVID-19 Addendum to the Agreement of Sale. Some situations may require a timeout in order to proceed safely through the transaction. This addendum permits these steps to be taken.

Many concerns have risen within our industry in less than two weeks. As of Wednesday (3/25) evening we have more concise guidelines from PAR: REALTORS® should “cease doing [all] in-person business” until Pennsylvania’s governor, Tom Wolf, informs otherwise. We know many sellers are left wondering how they might possibly assist their agents in selling their homes remotely. Prospective homeowners are skeptical about placing their property on the market right now. Buyers are looking at record-low mortgage rates, and depending on their situation, some are realizing there might never be a better time to buy – yes, even in a seller’s market. Though real estate sales have been robust amidst this outbreak, there has been increased caution as to how consumers should be proceeding through these unchartered waters. Our firm hopes to clarify some of these matters over the next few weeks as more information becomes available to us.

Above all, we would like to sincerely wish everyone in our community and in our world good health and safety as we move ahead in these unprecedented times. If you carry one thing with you, let it be hope. Should you need to contact any of our professionals, please do so here. We look forward to addressing more of your concerns as time goes by. Stay healthy!